"Q: Are most of the behavioural problems encountered in the tax advice market caused by advisers who are not members of a professional body?
We understand from HMRC that advisers who are not by members of professional bodies represent 30% per cent of tax agents, but those advisers are responsible for most of the behavioural issues HMRC encounter."
Odd. HMRC didn't ask that. It's almost as if it was designed to court controversy in this forum... The closest they came was to ask:
"Q9. Do you have any evidence about the impacts of unqualified agents or agents that don’t meet
standards? "
Note that the 'or' in the question would appear to suggest that HMRC are asking about all kinds of agents, not just unqualified agents.
We're quick to paint HMRC as behaving dismissively towards unqualified agents, but this doesn't seem to be the case in the material question (now, the small matter of asking only professional bodies to respond with evidence, on the other hand, does seem somewhat to suggest a foregone conclusion in the answers HMRC would like to hear...)
The answer provided by CIOT:
"As above, there is anecdotal evidence from members that costs arise [...] We have understood from HMRC in recent years that although 70% of agents hold professional qualifications and 30% do not, the problem behaviours noted by HMRC are in broadly the opposite proportions, that is, the great majority of problem behaviours come from the minority of advisers without qualifications. [...]"
I'd love to see the source of the statistics being referenced here, as it seems to be the crux of the matter. If CIOT understand this to be the case, upon what basis do they understand it? What data has HMRC provided to them? Alas, without a justification for this claim, I'm left wondering if there is any evidence of need for this at all. These percentages might be true, but they might be false. There's anecdotal evidence for alien abductions, but that doesn't mean I believe in them, nor should I prepare an entire system of defense for such an apparent threat.
I agree in concept. But independence is somewhat a problem here though, isn't it?
As far as I can tell from the outside (please correct me if I'm wrong, I have Googled but a few minutes on it), each examining body is also a professional body e.g. derives profit from membership. This is a conflict of interest that, given sufficient time, ensures standards will drift away from any would-be altruistic goal of serving the general public, and instead will mainly serve the membership body itself.
Also, as we're seeing a lot here, if you've invested in becoming part of the club, it's somewhat like a frat boy hazing ritual: you are thoroughly 'bought-in' and cannot imagine not loving the club.
Qualification and association membership would need to be fully decoupled before qualification could be trusted to be independent.
Actually, I don't think Kantar Public, who compiled this report for HMRC, came to any clear conclusion on the role of agents outside professional bodies, even if their tone and approach suggests they wanted to.
From the executive summary:
"Of greater concern are practising agents that are not members of any professional body. Agents working in
the private or public sector are assumed to be supervised by their employer; agents in practice that are not
members of a professional body may be doing exemplary work. But it is recognised that agents do make
errors, and it is currently very difficult for professional bodies to identify the most common tax errors that are being made and the types of agents making them. The professional bodies are keen to work with HMRC to
address this"
This paragraph literally makes no sense. Each sentence is a non-sequitor. It is definitively not the role of any professional body to "identify the most common tax errors" of non-member agents. I would assume, I am afraid, that this is an attempt to blur the lines between professional bodies and regulators. That spells danger for the profession.
In any industry, if a professional body qualifies, regulates and accredits its members, there is a systemic problem. No matter its original, presumably noble intentions, the system that persists the professional body is self-serving and thus the rules it proceeds by will gradually veer in favour of the club and its members, and bear less and less relation to the actual job of the accountant. As soon as you're in the club, you are invested in, incentivised to and indeed potentially required to continue to promote the supremacy of the club. It is not a surprise that anyone in the club wants everyone to join the club!
As an example, the ACCA rulebook is a whopping 548 pages. Including (taken at random) this beauty:
115.3 A professional accountant shall behave with courtesy and consideration towards all with whom the professional accountant comes into contact in a professional capacity
It might be reasonable, to a normally well-adjusted human being, to be discourteous in response to discourteousness. But es ist verboten! This seems a most hand-wringing form of corporate political correctness. Why anyone would opt for such regulation is beyond me, but each to their own and I understand that many may see the genuine benefit to them of joining a professional body. But is hugely expensive for the small practice in time and money to comply with all this legislation, even if they wanted to. To require it would be beyond "extraordinarily unfair". It would be a small-practice killer.
Besides, we shouldn't forget that a client can self-assess with zero regulation and zero accounting knowledge or skills. Unless HMRC can identify that unregulated professionals are disproportionately the cause of problems in the tax system, vs those who are members of a professional body, this is simply an unsurprising finding that the professional bodies want more members and more power.
My answers
"Q: Are most of the behavioural problems encountered in the tax advice market caused by advisers who are not members of a professional body?
We understand from HMRC that advisers who are not by members of professional bodies represent 30% per cent of tax agents, but those advisers are responsible for most of the behavioural issues HMRC encounter."
Odd. HMRC didn't ask that. It's almost as if it was designed to court controversy in this forum... The closest they came was to ask:
"Q9. Do you have any evidence about the impacts of unqualified agents or agents that don’t meet
standards? "
Note that the 'or' in the question would appear to suggest that HMRC are asking about all kinds of agents, not just unqualified agents.
We're quick to paint HMRC as behaving dismissively towards unqualified agents, but this doesn't seem to be the case in the material question (now, the small matter of asking only professional bodies to respond with evidence, on the other hand, does seem somewhat to suggest a foregone conclusion in the answers HMRC would like to hear...)
The answer provided by CIOT:
"As above, there is anecdotal evidence from members that costs arise [...] We have understood from HMRC in recent years that although 70% of agents hold professional qualifications and 30% do not, the problem behaviours noted by HMRC are in broadly the opposite proportions, that is, the great majority of problem behaviours come from the minority of advisers without qualifications. [...]"
I'd love to see the source of the statistics being referenced here, as it seems to be the crux of the matter. If CIOT understand this to be the case, upon what basis do they understand it? What data has HMRC provided to them? Alas, without a justification for this claim, I'm left wondering if there is any evidence of need for this at all. These percentages might be true, but they might be false. There's anecdotal evidence for alien abductions, but that doesn't mean I believe in them, nor should I prepare an entire system of defense for such an apparent threat.
I agree in concept. But independence is somewhat a problem here though, isn't it?
As far as I can tell from the outside (please correct me if I'm wrong, I have Googled but a few minutes on it), each examining body is also a professional body e.g. derives profit from membership. This is a conflict of interest that, given sufficient time, ensures standards will drift away from any would-be altruistic goal of serving the general public, and instead will mainly serve the membership body itself.
Also, as we're seeing a lot here, if you've invested in becoming part of the club, it's somewhat like a frat boy hazing ritual: you are thoroughly 'bought-in' and cannot imagine not loving the club.
Qualification and association membership would need to be fully decoupled before qualification could be trusted to be independent.
Wow. These three sentences reduced the problem to its nub with such violent accuracy.
Bravo.
Wow. These three sentences reduced the problem to its nub with such violent accuracy.
Bravo.
Actually, I don't think Kantar Public, who compiled this report for HMRC, came to any clear conclusion on the role of agents outside professional bodies, even if their tone and approach suggests they wanted to.
From the executive summary:
"Of greater concern are practising agents that are not members of any professional body. Agents working in
the private or public sector are assumed to be supervised by their employer; agents in practice that are not
members of a professional body may be doing exemplary work. But it is recognised that agents do make
errors, and it is currently very difficult for professional bodies to identify the most common tax errors that are being made and the types of agents making them. The professional bodies are keen to work with HMRC to
address this"
This paragraph literally makes no sense. Each sentence is a non-sequitor. It is definitively not the role of any professional body to "identify the most common tax errors" of non-member agents. I would assume, I am afraid, that this is an attempt to blur the lines between professional bodies and regulators. That spells danger for the profession.
In any industry, if a professional body qualifies, regulates and accredits its members, there is a systemic problem. No matter its original, presumably noble intentions, the system that persists the professional body is self-serving and thus the rules it proceeds by will gradually veer in favour of the club and its members, and bear less and less relation to the actual job of the accountant. As soon as you're in the club, you are invested in, incentivised to and indeed potentially required to continue to promote the supremacy of the club. It is not a surprise that anyone in the club wants everyone to join the club!
As an example, the ACCA rulebook is a whopping 548 pages. Including (taken at random) this beauty:
115.3 A professional accountant shall behave with courtesy and consideration towards all with whom the professional accountant comes into contact in a professional capacity
It might be reasonable, to a normally well-adjusted human being, to be discourteous in response to discourteousness. But es ist verboten! This seems a most hand-wringing form of corporate political correctness. Why anyone would opt for such regulation is beyond me, but each to their own and I understand that many may see the genuine benefit to them of joining a professional body. But is hugely expensive for the small practice in time and money to comply with all this legislation, even if they wanted to. To require it would be beyond "extraordinarily unfair". It would be a small-practice killer.
Besides, we shouldn't forget that a client can self-assess with zero regulation and zero accounting knowledge or skills. Unless HMRC can identify that unregulated professionals are disproportionately the cause of problems in the tax system, vs those who are members of a professional body, this is simply an unsurprising finding that the professional bodies want more members and more power.
No thanks.